Filed by sedaredgar.com - Lexon Technologies, Inc. - Exhibit 4.1






2009 EQUITY INCENTIVE PLAN

ARTICLE I - PLAN

1.1 PURPOSE. This Plan is a plan for key Employees (including
officers and employee directors) and Consultants of the Company and its
Affiliates and is intended to advance the best interests of the Company, its
Affiliates, and its stockholders by providing those persons who have substantial
responsibility for the management and growth of the Company and its Affiliates
with additional incentives and an opportunity to obtain or increase their
proprietary interest in the Company, thereby encouraging them to continue in the
employ of the Company or any of its Affiliates.

1.2 RULE 16B-3 PLAN. The Plan is intended to comply with all
applicable conditions of Rule 16b-3 (and all subsequent revisions thereof)
promulgated under the Securities Exchange Act of 1934, as amended (the “1934
Act”). To the extent any provision of the Plan or action by the Board of
Directors or Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee. In addition,
the Board of Directors may amend the Plan from time to time, as it deems
necessary in order to meet the requirements of any amendments to Rule 16b-3
without the consent of the shareholders of the Company.

1.3 EFFECTIVE DATE OF PLAN. The Plan shall be effective
December 8, 2009 (the “Effective Date”), provided that within one year of the
Effective Date, the Plan shall have been approved by at least a majority vote of
stockholders. No Incentive Option, Nonqualified Option, Stock Appreciation
Right, Restricted Stock Award or Performance Stock Award shall be granted
pursuant to the Plan ten years after the Effective Date.

ARTICLE II- DEFINITIONS

The words and phrases defined in this Article shall have the
meaning set out in these definitions throughout this Plan, unless the context in
which any such word or phrase appears reasonably requires a broader, narrower,
or different meaning.

2.1 “AFFILIATE” means any parent corporation and any subsidiary
corporation. The term “parent corporation” means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
“subsidiary corporation” means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.









2.2 “AWARD” means each of the following granted under this Plan: Incentive Option, Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or Performance Stock Award.


2.3 “BONUS STOCK AWARD” means an Award of Bonus Stock.


2.4 “BOARD OF DIRECTORS” means the board of directors of the Company.


2.5 “CHANGE IN CONTROL” shall mean and include the following transactions or situations:


(a) A sale, transfer, or other disposition by the Company through a single transaction or a series of transactions of securities of the Company representing thirty (30%) percent or more of the combined voting power of the Company’s then
outstanding securities to any “Unrelated Person” or “Unrelated Persons” acting in concert with one another. For purposes of this definition, the term “Person” shall mean and include any individual, partnership, joint
venture, association, trust corporation, or other entity (including a “group” as referred to in Section 13(d)(3) of the 1934 Act). For purposes of this definition, the term “Unrelated Person” shall mean and include any Person
other than the Company, a wholly-owned subsidiary of the Company, or an employee benefit plan of the Company; provided however, a sale to underwriters in connection with a public offering of the Company’s securities pursuant to a firm
commitment shall not be a Change of Control.


(b) A sale, transfer, or other disposition through a single transaction or a series of transactions of all or substantially all of the assets of the Company to an Unrelated Person or Unrelated Persons acting in concert with one another.


(c) A change in the ownership of the Company through a single transaction or a series of transactions such that any Unrelated Person or Unrelated Persons acting in concert with one another become the “Beneficial Owner,” directly or
indirectly, of securities of the Company representing at least thirty (30%) percent of the combined voting power of the Company’s then outstanding securities. For purposes of this definition, the term “Beneficial Owner” shall have the
same meaning as given to that term in Rule 13d-3 promulgated under the 1934 Act, provided that any pledgee of voting securities is not deemed to be the Beneficial Owner thereof prior to its acquisition of voting rights with respect to such
securities.


(d) Any consolidation or merger of the Company with or into an Unrelated Person, unless immediately after the consolidation or merger the holders of the common stock of the Company immediately prior to the consolidation or merger are the beneficial
owners of securities of the surviving corporation representing at least fifty (50%) percent of the combined voting power of the surviving corporation’s then outstanding securities.


(e) During any period of two years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at











least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds of the directors then still in office who were directors at the beginning of such period.


(1) A change in control of the Company of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the 1934 Act, or any successor regulation of similar importance, regardless of
whether the Company is subject to such reporting requirement.


2.6 “CODE” means the Internal Revenue Code of 1986, as amended.


2.7 “COMMITTEE” means the Compensation Committee of the Board of Directors or such other committee designated by the Board of Directors. The Committee shall be comprised solely of at least two members who are both Disinterested
Persons and Outside Directors or by the Board of Directors in its entirety.


2.8 “COMPANY” means Lexon Technologies, Inc.


2.9 “CONSULTANT” means any person, including an advisor, engaged by the Company or Affiliate to render services and who is compensated for such services.


2.10 “DISINTERESTED PERSON” means a “disinterested person” as that term is defined in Rule 16b-3 under the 1934 Act.


2.11 “ELIGIBLE PERSONS” shall mean, with respect to the Plan, those persons who, at the time that an Award is granted, are (i) key personnel (including officers and directors) of the Company or Affiliate, or (ii) Consultants or
independent contractors who provide valuable services to the Company or Affiliate as determined by the Committee.


2.12 “EMPLOYEE” means a person employed by the Company or any Affiliate to whom an Award is granted.


2.13 “FAIR MARKET VALUE” of the Stock as of any date means (a) the average of the high and low sale prices of the Stock on that date on the principal securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, the average of the high and low sale prices of the Stock on that date as reported on the NASDAQ National Market System; or (c) if the Stock is not listed on the NASDAQ National Market System, the average of the high
and low bid quotations for the Stock on that date as reported by the National Quotation Bureau Incorporated; or (d) if none of the foregoing is applicable, an amount at the election of the Committee equal to (x), the average between the closing bid
and ask prices per share of Stock on the last preceding date on which those prices were reported or (y) that amount as determined by the Committee in good faith.











2.14 “INCENTIVE OPTION” means an option to purchase Stock granted under this Plan which is designated as an “Incentive Option” and satisfies the requirements of Section 422 of the Code.


2.15 “NONQUALIFTED OPTION” means an option to purchase Stock granted under this Plan other than an Incentive Option.


2.16 “OPTION” means both an Incentive Option and a Nonqualified Option granted under this Plan to purchase shares of Stock.


2.17 “OPTION AGREEMENT” means the written agreement by and between the Company and an Eligible Person that sets out the terms of an Option.


2.18 “OUTSIDE DIRECTOR” means a member of the Board of Directors serving on the Committee who satisfies Section 162(m) of the Code.


2.19 “PLAN” means the Lexon Technologies, Inc. 2009 Equity Incentive Plan, as set out in this document and as it may be amended from time to time.


2.20 “PLAN YEAR” means the Company’s fiscal year.


2.21 “PERFORMANCE STOCK AWARD” means an award of shares of Stock to be issued to an Eligible Person if specified predetermined performance goals are satisfied as described in Article VII.


2.22 “RESTRICTED STOCK” means Stock awarded or purchased under a Restricted Stock Agreement entered into pursuant to this Plan, together with (i) all rights, warranties or similar items attached or accruing thereto or represented by the
certificate representing the stock and (ii) any stock or securities into which or for which the stock is thereafter converted or exchanged. The terms and conditions of the Restricted Stock Agreement shall be determined by the Committee consistent
with the terms of the Plan.


2.23 “RESTRICTED STOCK AGREEMENT” means an agreement between the Company or any Affiliate and the Eligible Person pursuant to which the Eligible Person receives a Restricted Stock Award subject to Article VI.


2.24 “RESTRICTED STOCK AWARD” means an Award of Restricted Stock.


2.25 “RESTRICTED STOCK PURCHASE PRICE” means the purchase price, if any, per share of Restricted Stock subject to an Award. The Restricted Stock Purchase Price shall be determined by the Committee. It may be greater than or less than the
Fair Market Value of the Stock on the date of the Stock Award.


2.26 “STOCK” means the common stock of the Company, $0.001 par value or, in the event that the outstanding shares of common stock are later changed into or exchanged






for a different class of stock or securities of the Company or
another corporation, that other stock or security.

2.27 “STOCK APPRECIATION RIGHT” and “SAR” means the right to
receive the difference between the Fair Market Value of a share of Stock on the
grant date and the Fair Market Value of the share of Stock on the exercise
date.

2.28 “10% STOCKHOLDER” means an individual who, at the time the
Option is granted, owns Stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any Affiliate. An
individual shall be considered as owning the Stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or half
blood), spouse, ancestors, and lineal descendants; and Stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust, shall be
considered as being owned proportionately by or for its stockholders, partners,
or beneficiaries.

ARTICLE III - ELIGIBILITY

The individuals who shall be eligible to receive Awards shall
be those Eligible Persons of the Company or any of its Affiliates as the
Committee shall determine from time to time. However, no member of the Committee
shall be eligible to receive any Award or to receive Stock, Options, Stock
Appreciation Rights or any Performance Stock Award under any other plan of the
Company or any of its Affiliates, if to do so would cause the individual not to
be a Disinterested Person or Outside Director. The Board of Directors may
designate one or more individuals who shall not be eligible to receive any Award
under this Plan or under other similar plans of the Company.

ARTICLE IV - GENERAL PROVISIONS RELATING TO AWARDS

4.1 AUTHORITY TO GRANT AWARDS. The Committee may grant to those
Eligible Persons of the Company or any of its Affiliates as it shall from time
to time determine, Awards under the terms and conditions of this Plan. Subject
only to any applicable limitations set out in this Plan, the number of shares of
Stock to be covered by any Award to be granted to an Eligible Person shall be
determined by the Committee.

4.2 SHARES SUBJECT TO PLAN. The total number of shares of Stock
set aside for Awards may be granted under the Plan shall be 10,000,000 shares.
The shares may be treasury shares or authorized but un-issued shares. The
maximum number of shares subject to options or stock appreciation rights which
may be issued to any eligible person under the plan during each plan year shall
be determined by the Committee. The maximum number of shares subject to
restricted stock awards which may be granted to any eligible person under the
plan during each plan year shall be determined by the Committee. The maximum
number of shares subject to performance stock awards which may be granted to any
eligible person during each plan year shall be determined by the Committee. The
number of shares stated in this Section 4.2 shall be subject to adjustment in
accordance with the provisions of Section 4.5. In the event that any outstanding
Award









shall expire or terminate for any reason or any Award is surrendered, the shares of Stock allocable to the unexercised portion of that Award may again be subject to an Award under the Plan.


4.3 NON-TRANSFERABILITY. Awards shall not be transferable by the Eligible Person otherwise than by will or under the laws of descent and distribution, and shall be exercisable, during the Eligible Person’s lifetime, only by him. Restricted
Stock shall be purchased by and/or become vested under a Restricted Stock Agreement during the Eligible Person’s lifetime, only by him. Any attempt to transfer an Award other than under the terms of the Plan and the Agreement shall terminate
the Award and all rights of the Eligible Person to that Award.


4.4 REQUIREMENTS OF LAW. The Company shall not be required to sell or issue any Stock under any Award if issuing that Stock would constitute or result in a violation by the Eligible Person or the Company of any provision of any law, statute, or
regulation of any governmental authority. Specifically, in connection with any applicable statute or regulation relating to the registration of securities, upon exercise of any Option or pursuant to any Award, the Company shall not be required to
issue any Stock unless the Committee has received evidence satisfactory to it to the effect that the holder of that Option or Award will not transfer the Stock except in accordance with applicable law, including receipt of an opinion of counsel
satisfactory to the Company to the effect that any proposed transfer complies with applicable law. The determination by the Committee on this matter shall be final, binding and conclusive. The Company may, but shall in no event be obligated to,
register any Stock covered by this Plan pursuant to applicable securities laws of any country or any political subdivision. In the event the Stock issuable on exercise of an Option or pursuant to an Award is not registered, the Company may imprint
on the certificate evidencing the Stock any legend that counsel for the Company considers necessary or advisable to comply with applicable law. The Company shall not be obligated to take any other affirmative action in order to cause the exercise of
an Option or vesting under an Award, or the issuance of shares pursuant thereto, to comply with any law or regulation of any governmental authority.


4.5 CHANGES IN THE COMPANY’S CAPITAL STRUCTURE.


(a) The existence of outstanding Options or Awards shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the
Company’s capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Stock or its rights, or the dissolution or liquidation
of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a Stock dividend, or other increase or reduction of the number of shares of the Stock outstanding, without receiving compensation for it in money, services or property, then (a) the number, class, and per
share price of shares of Stock subject to outstanding Options under this Plan shall be











appropriately adjusted in such a manner as to entitle an Eligible Person to receive upon exercise of an Option, for the same aggregate cash consideration, the equivalent total number and class of shares he would have received had he exercised his
Option in full immediately prior to the event requiring the adjustment; and (b) the number and class of shares of Stock then reserved to be issued under the Plan shall be adjusted by substituting for the total number and class of shares of Stock
then reserved, that number and class of shares of Stock that would have been received by the owner of an equal number of outstanding shares of each class of Stock as the result of the event requiring the adjustment.


(b) If the Company is merged or consolidated with another corporation and the Company is not the surviving corporation, or if the Company is liquidated or sells or otherwise disposes of substantially all its assets while unexercised Options remain
outstanding under this Plan:


(i) subject to the provisions of clause (c) below, after the effective date of the merger, consolidation, liquidation, sale or other disposition, as the case may be, each holder of an outstanding Option shall be entitled, upon exercise of the
Option, to receive, in lieu of shares of Stock, the number and class or classes of shares of stock or other securities or property to which the holder would have been entitled if, immediately prior to the merger, consolidation, liquidation, sale or
other disposition, the holder had been the holder of record of a number of shares of Stock equal to the number of shares as to which the Option shall be so exercised;


(ii) the Board of Directors may waive any limitations set out in or imposed under this Plan so that all Options, from and after a date prior to the effective date of the merger, consolidation, liquidation, sale or other disposition, as the case may
be, specified by the Board of Directors, shall be exercisable in full; and


(iii) all outstanding Options may be canceled by the Board of Directors as of the effective date of any merger, consolidation, liquidation, sale or other disposition, if (i) notice of cancellation shall be given to each holder of an Option and (ii)
each holder of an Option shall have the right to exercise that Option in full (without regard to any limitations set out in or imposed under this Plan or the Option Agreement granting that Option) during a period set by the Board of Directors
preceding the effective date of the merger, consolidation, liquidation, sale or other disposition and, if in the event all outstanding Options may not be exercised in full under applicable securities laws without registration of the shares of Stock
issuable on exercise of the Options, the Board of Directors may limit the exercise of the Options to the number of shares of Stock, if any, as may be issued without registration. The method of choosing which Options may be exercised, and the number
of shares of Stock for which Options may be exercised, shall be solely within the discretion of the Board of Directors.


(c) After a merger of one or more corporations into the Company or after a consolidation of the Company and one or more corporations in which the Company shall be the surviving corporation, each Eligible Person shall be entitled to have his
Restricted Stock






and shares earned under a Performance Stock Award appropriately
adjusted based on the manner the Stock was adjusted under the terms of the
agreement of merger or consolidation.

(d) In each situation described in this Section 4.5, the
Committee will make similar adjustments, as appropriate, in outstanding Stock
Appreciation Rights.

(e) The issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or upon the exercise
of rights or warrants to subscribe for them, or upon conversion of shares or
obligations of the Company convertible into shares or other securities, shall
not affect, and no adjustment by reason of such issuance shall be made with
respect to, the number, class, or price of shares of Stock then subject to
outstanding Awards.

4.6 ELECTION UNDER SECTION 83(B) OF THE CODE. No Employee shall
exercise the election permitted under Section 83(b) of the Code without written
approval of the Committee. Any Employee doing so shall forfeit all Awards issued
to him under this Plan.

ARTICLE V - OPTIONS AND STOCK APPRECIATION RIGHTS

5.1 TYPE OF OPTION. The Committee shall specify at the time of
grant whether a given Option shall constitute an Incentive Option or a
Nonqualified Option. Incentive Stock Options may only be granted to
Employees.

5.2 OPTION PRICE. The price at which Stock may be purchased
under an Incentive Option shall not be less than the greater of: (a) 100% of the
Fair Market Value of the shares of Stock on the date the Option is granted or
(b) the aggregate par value of the shares of Stock on the date the Option is
granted. The Committee in its discretion may provide that the price at which
shares of Stock may be purchased under an Incentive Option shall be more than
100% of Fair Market Value. In the case of any 10% Stockholder, the price at
which shares of Stock may be purchased under an Incentive Option shall not be
less than 110% of the Fair Market Value of the Stock on the date the Incentive
Option is granted. The price at which shares of Stock may be purchased under a
Nonqualified Option shall be such price as shall be determined by the Committee
in its sole discretion but in no event lower than the par value of the shares of
Stock on the date the Option is granted.

5.3 DURATION OF OPTIONS AND SARS. No Option or SAR shall be
exercisable after the expiration of ten (10) years from the date the Option or
SAR is granted. In the case of a 10% Stockholder, no Incentive Option shall be
exercisable after the expiration of five years from the date the Incentive
Option is granted.

5.4 AMOUNT EXERCISABLE -- INCENTIVE OPTIONS. Each Option may be
exercised from time to time, in whole or in part, in the manner and subject to
the









conditions the Committee, in its sole discretion, may provide in the Option Agreement, as long as the Option is valid and outstanding, and further provided that no Option may be exercisable within six (6) months of the date of grant, unless
otherwise stated in the Option Agreement. To the extent that the aggregate Fair Market Value (determined as of the time an Incentive Option is granted) of the Stock with respect to which Incentive Options first become exercisable by the optionee
during any calendar year (under this Plan and any other incentive stock option plan(s) of the Company or any Affiliate) exceeds $100,000, the portion in excess of $100,000 of the Incentive Option shall be treated as a Nonqualified Option. In
making this determination, Incentive Options shall be taken into account in the order in which they were granted.


5.5 EXERCISE OF OPTIONS. Each Option shall be exercised by the delivery of written notice to the Committee setting forth the number of shares of Stock with respect to which the Option is to be exercised, together with:


(a) cash, certified check, bank draft, or postal or express money order payable to the order of the Company for an amount equal to the option price of the shares,


(b) Stock at its Fair Market Value on the date of exercise, (if approved in advance by the Committee),


(c) an election to make a cashless exercise through a registered broker-dealer (if approved in advance by the Committee),


(d) an election to have shares of Stock, which otherwise would be issued on exercise, withheld in payment of the exercise price (if approved in advance by the Committee), and/or


(e) any other form of payment which is acceptable to the Committee, including without limitation, payment in the form of a promissory note, and specifying the address to which the certificates for the shares are to be mailed.


As promptly as practicable after receipt of written notification and payment, the Company shall deliver to the Eligible Person certificates for the number of shares with respect to which the Option has been exercised, issued in the Eligible
Person’s name. If shares of Stock are used in payment, the aggregate Fair Market Value of the shares of Stock tendered must be equal to or less than the aggregate exercise price of the shares being purchased upon exercise of the Option, and any
difference must be paid by cash, certified check, bank draft, or postal or express money order payable to the order of the Company. Delivery of the shares shall be deemed effected for all purposes when a stock transfer agent of the Company shall
have deposited the certificates in the United States mail, addressed to the Eligible Person, at the address specified by the Eligible Person.


Whenever an Option is exercised by exchanging shares of Stock owned by the Eligible Person, the Eligible Person shall deliver to the Company certificates registered in the name of the Eligible Person representing a number of shares of Stock legally
and











beneficially owned by the Eligible Person, free of all liens, claims, and encumbrances of every kind, accompanied by stock powers duly endorsed in blank by the record holder of the shares represented by the certificates (with signature guaranteed by
a commercial bank or trust company or by a brokerage firm having a membership on a registered national stock exchange). The delivery of certificates upon the exercise of Options is subject to the condition that the person exercising the Option
provide the Company with the information the Company might reasonably request pertaining to exercise, sale or other disposition.


5.6 STOCK APPRECIATION RIGHTS. All Eligible Persons shall be eligible to receive Stock Appreciation Rights. The Committee shall determine the SAR to be awarded from time to time to any Eligible Person. The grant of an SAR to be awarded from time to
time shall neither entitle such person to, nor disqualify such person, from participation in any other grant of awards by the Company, whether under this Plan or any other plan of the Company. If granted as a stand-alone SAR Award, the terms of the
Award shall be provided in a Stock Appreciation Rights Agreement.


5.7 STOCK APPRECIATION RIGHTS IN TANDEM WITH OPTIONS. Stock Appreciation Rights may, at the discretion of the Committee, be included in each Option granted under the Plan to permit the holder of an Option to surrender that Option, or a portion of
the part which is then exercisable, and receive in exchange, upon the conditions and limitations set by the Committee, an amount equal to the excess of the Fair Market Value of the Stock covered by the Option, or the portion of it that was
surrendered, determined as of the date of surrender, over the aggregate exercise price of the Stock. The payment may be made in shares of Stock valued at Fair Market Value, in cash, or partly in cash and partly in shares of Stock, as the Committee
shall decide in its sole discretion. Stock Appreciation Rights may be exercised only when the Fair Market Value of the Stock covered by the Option surrendered exceeds the exercise price of the Stock. In the event of the surrender of an Option, or a
portion of it, to exercise the Stock Appreciation Rights, the shares represented by the Option or that part of it which is surrendered, shall not be available for reissuance under the Plan. Each Stock Appreciation Right issued in tandem with an
Option (a) will expire not later than the expiration of the underlying Option, (b) may be for no more than 100% of the difference between the exercise price of the underlying Option and the Fair Market Value of a share of Stock at the time the Stock
Appreciation Right is exercised, (c) is transferable only when the underlying Option is transferable, and under the same conditions, and (d) may be exercised only when the underlying Option is eligible to be exercised.


5.8 CONDITIONS OF STOCK APPRECIATION RIGHTS. All Stock Appreciation Rights shall be subject to such terms, conditions, restrictions or limitations as the Committee deems appropriate, including by way of illustration but not by way of limitation,
restrictions on transferability, requirement of continued employment, individual performance, financial performance of the Company or payment of any applicable employment or withholding taxes.











5.9 PAYMENT OF STOCK APPRECIATION RIGHTS. The amount of payment to which the Eligible Person who reserves an SAR shall be entitled upon the exercise of each SAR shall be equal to the amount, if any by which the Fair Market Value of the specified
shares of Stock on the exercise date exceeds the Fair Market Value of the specified shares of Stock on the date of grant of the SAR. The SAR shall be paid in either cash or Stock, as determined in the discretion of the Committee as set forth in the
SAR agreement. If the payment is in Stock, the number of shares to be paid shall be determined by dividing the amount of such payment by the Fair Market Value of Stock on the exercise date of such SAR.


5.10 EXERCISE ON TERMINATION OF EMPLOYMENT. Unless it is expressly provided otherwise in the Option or SAR agreement, Options and SAR granted to Employees shall terminate one day less than three months after severance of employment of the Employee
from the Company and all Affiliates for any reason, with or without cause, other than death, retirement under the then established rules of the Company, or severance for disability. Whether authorized leave of absence or absence on military or
government service shall constitute severance of the employment of the Employee shall be determined by the Committee at that time.


5.11 DEATH. If, before the expiration of an Option or SAR, the Eligible Person, whether in the employ of the Company or after he has retired or was severed for disability, or otherwise dies, the Option or SAR shall continue until the earlier of the
Option’s or SAWs expiration date or one year following the date of his death, unless it is expressly provided otherwise in the Option or SAR agreement. After the death of the Eligible Person, his executors, administrators or any persons to whom
his Option or SAR may be transferred by will or by the laws of descent and distribution shall have the right, at any time prior to the Option’s or SAR’s expiration or termination, whichever is earlier, to exercise it, to the extent to
which he was entitled to exercise it immediately prior to his death, unless it is expressly provided otherwise in the Option or SAR’s agreement.


5.12 RETIREMENT. Unless it is expressly provided otherwise in the Option Agreement, before the expiration of an Incentive Option, the Employee shall be retired in good standing from the employ of the Company under the then established rules of the
Company, the Incentive Option shall terminate on the earlier of the Option’s expiration date or one day less than one year after his retirement; provided, if an Incentive Option is not exercised within specified time limits prescribed by the
Code, it will become a Nonqualified Option by operation of law. Unless it is expressly provided otherwise in the Option Agreement, if before the expiration of a Nonqualified Option, the Employee shall be retired in good standing from the employ of
the Company under the then established rules of the Company, the Nonqualified Option shall terminate on the earlier of the Nonqualified Option’s expiration date or one day less than one year after his retirement. In the event of retirement, the
Employee shall have the right prior to the termination of the Nonqualified Option to exercise the Nonqualified Option, to the extent to which he was entitled to exercise it immediately prior to his retirement, unless it is expressly provided
otherwise in the Option Agreement. Upon retirement, an SAR shall continue to be exercisable for the remainder of the term of the SAR agreement.











5.13 DISABILITY. If, before the expiration of an Option or SAR, the Employee shall be severed from the employ of the Company for disability, the Option or SAR shall terminate on the earlier of the Option’s or SAR’s expiration date or one
day less than one year after the date he was severed because of disability, unless it is expressly provided otherwise in the Option or SAR agreement. In the event that the Employee shall be severed from the employ of the Company for disability, the
Employee shall have the right prior to the termination of the Option or SAR to exercise the Option, to the extent to which he was entitled to exercise it immediately prior to his retirement or severance of employment for disability, unless it is
expressly provided otherwise in the Option Agreement.


5.14 SUBSTITUTION OPTIONS. Options may be granted under this Plan from time to time in substitution for stock options held by employees of other corporations who are about to become employees of or affiliated with the Company or any Affiliate as the
result of a merger or consolidation of the employing corporation with the Company or any Affiliate, or the acquisition by the Company or any Affiliate of the assets of the employing corporation, or the acquisition by the Company or any Affiliate of
stock of the employing corporation as the result of which it becomes an Affiliate of the Company. The terms and conditions of the substitute Options granted may vary from the terms and conditions set out in this Plan to the extent the Committee, at
the time of grant, may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted.


5.15 RELOAD OPTIONS. Without in any way limiting the authority of the Board of Directors or Committee to make or not to make grants of Options hereunder, the Board of Directors or Committee shall have the authority (but not an obligation) to include
as part of any Option Agreement a provision entitling the Eligible Person to a further Option (a “Reload Option”) in the event the Eligible Person exercises the Option evidenced by the Option Agreement, in whole or in part, by surrendering
other shares of Stock in accordance with this Plan and the terms and conditions of the Option Agreement. Any such Reload Option (a) shall be for a number of shares equal to the number of shares surrendered as part or all of the exercise price of
such Option; (b) shall have an expiration date which is the greater of (i) the same expiration date of the Option the exercise of which gave rise to such Reload Option or (ii) one year from the date of grant of the Reload Option; and (c) shall have
an exercise price which is equal to one hundred percent (100%) of the Fair Market Value of the Stock subject to the Reload Option on the date of exercise of the original Option. Notwithstanding the foregoing, a Reload Option which is an Incentive
Option and which is granted to a 10% Stockholder, shall have an exercise price which is equal to one hundred ten percent (110%) of the Fair Market Value of the Stock subject to the Reload Option on the date of exercise of the original Option and
shall have a term which is no longer than five (5) years.


Any such Reload Option may be an Incentive Option or a Nonqualified Option, as the Board of Directors or Committee may designate at the time of the grant of the original Option; provided, however, that the designation of any Reload Option as an
Incentive Option shall be subject to the one hundred thousand dollar ($100,000) annual limitation






on exercisability of Incentive Stock Options described in the
Plan and in Section 422(d) of the Code. There shall be no Reload Options on a
Reload Option. Any such Reload Option shall be subject to the availability of
sufficient shares under Section 4.2 herein and shall be subject to such other
terms and conditions as the Board of Directors or Committee may determine which
are not inconsistent with the express provisions of the Plan regarding the terms
of Options.

5.16 NO RIGHTS AS STOCKHOLDER. No Eligible Person shall have
any rights as a stockholder with respect to Stock covered by his Option until
the date a stock certificate is issued for the Stock.

ARTICLE VI- RESTRICTED STOCK AWARDS

6.1 RESTRICTED STOCK AWARDS. The Committee may issue shares of
Stock to an Eligible Person subject to the terms of a Restricted Stock
Agreement. The Restricted Stock may be issued for no payment by the Eligible
Person or for a payment below the Fair Market Value on the date of grant.
Restricted Stock shall be subject to restrictions as to sale, transfer,
alienation, pledge or other encumbrance and generally will be subject to vesting
over a period of time specified in the Restricted Stock Agreement. The Committee
shall determine the period of vesting, the number of shares, the price, if any,
of Stock included in a Restricted Stock Award, and the other terms and
provisions which are included in a Restricted Stock Agreement.

6.2 RESTRICTIONS. Restricted Stock shall be subject to the
terms and conditions as determined by the Committee, including without
limitation, any or all of the following:

(a) a prohibition against the sale, transfer, alienation,
pledge or other encumbrance of the shares of Restricted Stock, such prohibition
to lapse (i) at such time or times as the Committee shall determine (whether in
annual or more frequent installments, at the time of the death, disability or
retirement of the holder of such shares, or otherwise);

(b) a requirement that the holder of shares of Restricted Stock
forfeit, or in the case of shares sold to an Eligible Person, resell back to the
Company at his cost, all or a part of such shares in the event of termination of
the Eligible Person’s employment during any period in which the shares remain
subject to restrictions;

(c) a prohibition against employment of the holder of
Restricted Stock by any competitor of the Company or its Affiliates, or against
such holder’s dissemination of any secret or confidential information belonging
to the Company or an Affiliate;

(d) unless stated otherwise in the Restricted Stock
Agreement,

(i) if restrictions remain at the time of severance of
employment with the Company and all Affiliates, other than for reason of
disability or death, the Restricted Stock shall be forfeited; and




(ii) if severance of employment is by reason of disability or
death, the restrictions on the shares shall lapse and the Eligible Person or his
heirs or estate shall be 100% vested in the shares subject to the Restricted
Stock Agreement.

6.3 STOCK CERTIFICATE. Shares of Restricted Stock shall be
registered in the name of the Eligible Person receiving the Restricted Stock
Award and deposited, together with a stock power endorsed in blank, with the
Company. Each such certificate shall bear a legend in substantially the
following form:

“The transferability of this certificate and the shares of
Stock represented by it is restricted by and subject to the terms and conditions
(including conditions of forfeiture) contained in the Medizone International,
Inc. 2008 Equity Incentive Plan and an agreement entered into between the
registered owner and the Company. A copy of the Plan and agreement is on file in
the office of the Secretary of the Company.”

6.4 RIGHTS AS STOCKHOLDER. Subject to the terms and conditions
of the Plan, each Eligible Person receiving a certificate for Restricted Stock
shall have all the rights of a stockholder with respect to the shares of Stock
included in the Restricted Stock Award during any period in which such shares
are subject to forfeiture and restrictions on transfer, including without
limitation, the right to vote such shares. Dividends paid with respect to shares
of Restricted Stock in cash or property other than Stock in the Company or
rights to acquire stock in the Company shall be paid to the Eligible Person
currently. Dividends paid in Stock in the Company or rights to acquire Stock in
the Company shall be added to and become a part of the Restricted Stock.

6.5 LAPSE OF RESTRICTIONS. At the end of the time period during
which any shares of Restricted Stock are subject to forfeiture and restrictions
on sale, transfer, alienation, pledge, or other encumbrance, such shares shall
vest and will be delivered in a certificate, free of all restrictions, to the
Eligible Person or to the Eligible Person’s legal representative, beneficiary or
heir; provided the certificate shall bear such legend, if any, as the Committee
determines is reasonably required by applicable law. By accepting a Stock Award
and executing a Restricted Stock Agreement, the Eligible Person agrees to remit
when due any federal and state income and employment taxes required to be
withheld.

6.6 RESTRICTION PERIOD. No Restricted Stock Award may provide
for restrictions continuing beyond ten (10) years from the date of grant.

ARTICLE VII- PERFORMANCE STOCK AWARDS

7.1 AWARD OF PERFORMANCE STOCK. The Committee may award shares
of Stock, without any payment for such shares, to designated Eligible Persons if
specified performance goals established by the Committee are satisfied. The
terms and provisions herein relating to these performance-based awards are
intended to satisfy Section 162(m) of the Code and regulations issued
thereunder. The designation of an employee eligible for a specific Performance
Stock Award shall be made by the Committee in writing prior




to the beginning of the period for which the performance is
measured (or within such period as permitted by IRS regulations). The Committee
shall establish the maximum number of shares of Stock to be issued to a
designated Employee if the performance goal or goals are met. The Committee
reserves the right to make downward adjustments in the maximum amount of an
Award if in its discretion unforeseen events make such adjustment
appropriate.

7.2 PERFORMANCE GOALS. Performance goals determined by the
Committee may be based on specified increases in cash flow, net profits, Stock
price, Company, segment or Affiliate sales, market share, earnings per share,
return on assets, and/or return on stockholders’ equity.

7.3 ELIGIBILITY. The employees eligible for Performance Stock
Awards are the senior officers (i.e., chief executive officer, president, vice
presidents, secretary, treasurer, and similar positions) of the Company and its
Affiliates, and such other employees of the Company and its Affiliates as may be
designated by the Committee.

7.4 CERTIFICATE OF PERFORMANCE. The Committee must certify in
writing that a performance goal has been attained prior to issuance of any
certificate for a Performance Stock Award to any Employee. If the Committee
certifies the entitlement of an Employee to the Performance Stock Award, the
certificate will be issued to the Employee as soon as administratively
practicable, and subject to other applicable provisions of the Plan, including
but not limited to, all legal requirements and tax withholding. However, payment
may be made in shares of Stock, in cash, or partly in cash and partly in shares
of Stock, as the Committee shall decide in its sole discretion. If a cash
payment is made in lieu of shares of Stock, the number of shares represented by
such payment shall not be available for subsequent issuance under this Plan.

ARTICLE VII- BONUS STOCK AWARDS

8.1 AWARD OF BONUS STOCK. The committee may award shares of
Stock to Eligible Persons, without any payment for such shares and without any
specified performance goals. The Committee reserves the right to issue such
amount of shares to Eligible Persons as the Committee deems fit.

8.2 ELIGIBILITY. The Employees eligible for Bonus Stock Awards
are the senior officers (i.e., chief executive officer, chief operating officer,
chief financial officer, president, vice presidents, secretary, treasurer, and
similar positions) and consultants of the Company and its Affiliates, and such
other employees of the Company and its Affiliates as may be designated by the
Committee.

ARTICLE IX - ADMINISTRATION

The Plan shall be administered by the Committee. All questions
of interpretation and application of the Plan and Awards shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All




determinations of the Committee shall be made by a majority of
its members. Any decision or determination reduced to writing and signed by a
majority of the members shall be as effective as if it had been made by a
majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options which are designated to
be Incentive Options to qualify as Incentive Options. In carrying out its
authority under this Plan, the Committee shall have full and final authority and
discretion, including but not limited to the following rights, powers and
authorities, to:

(a) determine the Eligible Persons to whom and the time or
times at which Options or Awards will be made,

(b) determine the number of shares and the purchase price of
Stock covered in each Option or Award, subject to the terms of the Plan,

(c) determine the terms, provisions and conditions of each
Option and Award, which need not be identical,

(d) accelerate the time at which any outstanding Option or SAR
may be exercised, or Restricted Stock Award will vest,

(e) define the effect, if any, on an Option or Award of the
death, disability, retirement, or termination of employment of the Employee,

(f) prescribe, amend and rescind rules and regulations relating
to administration of the Plan, and

(g) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper administration of
this Plan.

The actions of the Committee in exercising all of the rights,
powers, and authorities set out in this Article and all other Articles of this
Plan, when performed in good faith and in its sole judgment, shall be final,
conclusive and binding on all parties.

ARTICLE X - AMENDMENT OR TERMINATION OF PLAN

The Board of Directors of the Company may amend, terminate or
suspend this Plan at any time, in its sole and absolute discretion; provided,
however, that to the extent required to qualify this Plan under Rule 16b-3
promulgated under Section 16 of the Securities Exchange Act of 1934, as amended,
no amendment that would (a) materially increase the number of shares of Stock
that may be issued under this Plan, (b) materially modify the requirements as to
eligibility for participation in this Plan, or (c) otherwise materially increase
the benefits accruing to participants under this Plan, shall be made without the
approval of the Company’s stockholders; provided further, however, that to the
extent required to maintain the status of any Incentive Option under the Code,
no amendment that would (a) change the aggregate number of shares of Stock which
may be issued under Incentive Options, (b) change the class of employees
eligible to receive




Incentive Options, or (c) decrease the Option price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company’s stockholders.
Subject to the preceding sentence, the Board of Directors shall have the power
to make any changes in the Plan and in the regulations and administrative
provisions under it or in any outstanding Incentive Option as in the opinion of
counsel for the Company may be necessary or appropriate from time to time to
enable any Incentive Option granted under this Plan to continue to qualify as an
incentive stock option or such other stock option as may be defined under the
Code so as to receive preferential federal income tax treatment.

ARTICLE XI- MISCELLANEOUS

11.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be set
aside nor shall a trust fund of any kind be established to secure the rights of
any Eligible Person under this Plan. All Eligible Persons shall at all times
rely solely upon the general credit of the Company for the payment of any
benefit which becomes payable under this Plan.

11.2 NO EMPLOYMENT OBLIGATION. The granting of any Option or
Award shall not constitute an employment contract, express or implied, nor
impose upon the Company or any Affiliate any obligation to employ or continue to
employ any Eligible Person. The right of the Company or any Affiliate to
terminate the employment of any person shall not be diminished or affected by
reason of the fact that an Option or Award has been granted to him.

11.3 FORFEITURE. Notwithstanding any other provisions of this
Plan, if the Committee finds by a majority vote after full consideration of the
facts that an Eligible Person, before or after termination of his employment
with the Company or an Affiliate for any reason (a) committed or engaged in
fraud, embezzlement, theft, commission of a felony, or proven dishonesty in the
course of his employment by the Company or an Affiliate, which conduct damaged
the Company or Affiliate, or disclosed trade secrets of the Company or an
Affiliate, or (b) participated, engaged in or had a material, financial or other
interest, whether as an employee, officer, director, consultant, contractor,
stockholder, owner, or otherwise, in any commercial endeavor in the United
States which is competitive with the business of the Company or an Affiliate
without the written consent of the Company or Affiliate, the Eligible Person
shall forfeit all outstanding Options and all outstanding Awards, and including
all exercised Options and other situations pursuant to which the Company has not
yet delivered a stock certificate. Clause (b) shall not be deemed to have been
violated solely by reason of the Eligible Person’s ownership of stock or
securities of any publicly owned corporation, if that ownership does not result
in effective control of the corporation.

The decision of the Committee as to the cause of an Employee’s
discharge, the damage done to the Company or an Affiliate, and the extent of an
Eligible Person’s competitive activity shall be final. No decision of the
Committee, however, shall affect the finality of the discharge of the Employee
by the Company or an Affiliate in any manner.




11.4 TAX WITHHOLDING. The Company or any Affiliate shall be
entitled to deduct from other compensation payable to each Eligible Person any
sums required by federal, state, or local tax law to be withheld with respect to
the grant or exercise of an Option or SAR, lapse of restrictions on Restricted
Stock, or award of Performance Stock. In the alternative, the Company may
require the Eligible Person (or other person exercising the Option, SAR or
receiving the Stock) to pay the sum directly to the employer corporation. If the
Eligible Person (or other person exercising the Option or SAR or receiving the
Stock) is required to pay the sum directly, payment in cash or by check of such
sums for taxes shall be delivered within 10 days after the date of exercise or
lapse of restrictions. The Company shall have no obligation upon exercise of any
Option or lapse of restrictions on Stock until payment has been received, unless
withholding (or offset against a cash payment) as of or prior to the date of
exercise or lapse of restrictions is sufficient to cover all sums due with
respect to that exercise. The Company and its Affiliates shall not be obligated
to advise an Eligible Person of the existence of the tax or the amount which the
employer corporation will be required to withhold.

11.5 WRITTEN AGREEMENT. Each Option and Award shall be embodied
in a written agreement which shall be subject to the terms and conditions of
this Plan and shall be signed by the Eligible Person and by a member of the
Committee on behalf of the Committee and the Company or an executive officer of
the Company, other than the Eligible Person, on behalf of the Company. The
agreement may contain any other provisions that the Committee in its discretion
shall deem advisable which are not inconsistent with the terms of this Plan.

11.6 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF
DIRECTORS. With respect to administration of this Plan, the Company shall
indemnify each present and future member of the Committee and the Board of
Directors against, and each member of the Committee and the Board of Directors
shall be entitled without further act on his part to indemnity from the Company
for, all expenses (including attorney’s fees, the amount of judgments and the
amount of approved settlements made with a view to the curtailment of costs of
litigation, other than amounts paid to the Company itself) reasonably incurred
by him in connection with or arising out of any action, suit, or proceeding in
which he may be involved by reason of his being or having been a member of the
Committee and/or the Board of Directors, whether or not he continues to be a
member of the Committee and/or the Board of Directors at the time of incurring
the expenses, including, without limitation, matters as to which he shall be
finally adjudged in any action, suit or proceeding to have been found to have
been negligent in the performance of his duty as a member of the Committee or
the Board of Directors. However, this indemnity shall not include any expenses
incurred by any member of the Committee and/or the Board of Directors in respect
of matters as to which he shall be finally adjudged in any action, suit or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of his duty as a member of the Committee and the Board of Directors.
In addition, no right of indemnification under this Plan shall be available to
or enforceable by any member of the Committee and the Board of Directors unless,
within 60 days after institution of any action, suit or proceeding, he shall
have offered the Company, in writing, the opportunity to handle and defend same
at









its own expense. This right of indemnification shall inure to the benefit of the heirs, executors or administrators of each member of the Committee and the Board of Directors and shall be in addition to all other rights to which a member of the
Committee and the Board of Directors may be entitled as a matter of law, contract, or otherwise.


11.7 GENDER. If the context requires, words of one gender when used in this Plan shall include the others and words used in the singular or plural shall include the other.


11.8 HEADINGS. Headings of Articles and Sections are included for convenience of reference only and do not constitute part of the Plan and shall not be used in construing the terms of the Plan.


11.9 OTHER COMPENSATION PLANS. The adoption of this Plan shall not affect any other stock option, incentive or other compensation or benefit plans in effect for the Company or any Affiliate, nor shall the Plan preclude the Company from establishing
any other forms of incentive or other compensation for employees of the Company or any Affiliate.


11.10 OTHER OPTIONS OR AWARDS. The grant of an Option or Award shall not confer upon the Eligible Person the right to receive any future or other Options or Awards under this Plan, whether or not Options or Awards may be granted to similarly
situated Eligible Persons, or the right to receive future Options or Awards upon the same terms or conditions as previously granted.


11.11 GOVERNING LAW. The provisions of this Plan shall be construed, administered, and governed under the laws of the State of Delaware.